-Tom Porcelli, RBC Capital Markets chief US economist
The US job growth gained momentum, while wages rose, indicating strength of the US economy. US nonfarm payrolls increased to 257,000, up from the expected 236,000, which led to a rise in confidence in the job market. This January has been the 11th month in a row, when job gains were over 200,000. Hence, a rise in the labour force was the main driver behind an increase in the unemployment rate, which edged up by 0.1 percentage point to 5.7%. Moreover, the positive data also had an effect on the stock market, with US stock index futures strengthening along with the Greenback. According to Capital Economics, the Fed cannot wait much longer having low interest rates, especially when the solid employment growth is causing wages to increase too. Wages added only 12 cents last months. However, combined with slumping oil prices, a surge in consumer spending is highly possible, thus maintaining economic growth in the US. Economic output dropped to 2.6% annual rate in the fourth quarter of 2014, from 5% rate in the prior three-month period.
Meanwhile, the average hourly earnings in the US rose more than anticipated in January. The Department of Labor reported an increase of 0.7 percentage points, from -0.2% to 0.5%. The data beat expectations of a 0.3% increase.
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